The Danger of Trading Nearly Untradeable Stock Markets

To inexperienced traders, there is a massive danger in attempting to trade nearly untradeable stock markets that is escaping them. Winning against the big Wall Street banks and brokerage firms has always been difficult because every trade you place with them is an open book on their trading platform for them to review. Thus, they can see every long and every short position that thousands of their clients hold as well as every stop-loss order and every derivative position that is open as well. In essence, to use a poker analogy, it would be like having the two cards dealt to you in a Texas Hold’Em game face up instead of face down so every other player knows the best hand that you hold. In fact, given the numerous strange, absurd stock price movements I’ve witnessed that are clustered around OpEx days over the years, I’m 99.9% convinced that banks program their HFT programming algorithms to “hunt” stops to ensure that option positions end up profitable for them and with losses for their clients.

At a minimum, given the absurdity of stock price movements I’ve observed over the years, including a massive 20%+ higher price movement in Goldman Sachs stock right before an OpEx day that turned some massive extremely out-of-the-money call option positions from worthless into extremely profitable once, and given the near impossibility of such an out-of-the-blue on zero positive news price move that would make such a move a 6 or 7-sigma event in a free market, there are undoubtedly questionable practices occurring with regulatory in financial markets with the blessings of regulatory agencies that are supposed to regulate such illegal practices. In plain English, the only possible explanation for some of these price movements were shenanigans being pulled off by traders with the assistance of HFT programs. Consequently, this is a massive strike one against the retail trader that is trying to compete against a computer controlled pricing system that can seemingly with ease, move stock prices up and down to price points to suddenly transform absurdly worthless out-of-the-money call options into a treasure trove in just a few days, and vice versa. Since such price movements make some of the absurd stock price movements that occurred during 9/11 seem normal, and zero investigations ensue every time from such manipulations, this is also a sign of the parasitic nature of the entire apparatus. If protestors against corruption of the law enforcement apparatus want to find their next cause, the corruption that exists in the financial trading apparatus will provide stiff competition.

Secondly, I have observed numerous times over the years, prices bottom just a few pennies under prices at which a large number of stops exist that trigger all stops and chase all longs out of their open positions, before prices immediately rebound and zoom higher again.  Such behaviors are not normal in a fair and free market and again, are almost definitely executed with the assistance of HFT algorithmic software employed by large global banking and trading firms. Finally, I’ve also observed put options on contracts in real time, with at least half the time until expiration still existing (meaning time decay on option prices should factor significantly into price volatility yet), fall in price when the underlying stock price moved approximately 1% lower. Conversely, I’ve also observed in real time, call option prices fall in price when the underlying stock price moved approximately 1% higher in price, all price behavior that should not happen in free and fair markets without the assistance of computer assisted trading fraud. Consequently, every year when you read the statistics that not only do 95% (or whatever the overwhelming percentage statistic happens to be in the current year) of mutual fund managers fail to beat the annual performance of the S&P 500 index or their equivalent ETF index, but that the majority of mutual fund managers fail to invest a single dollar or euro in the funds that they manage, the reason for these results and behaviors should be obvious.

https://www.ft.com/content/2c910bce-7105-11e6-9ac1-1055824ca907

Unfortunately, the advancement of technology and computer assisted trading, including the development and deployment of HFT algorithms, fiber optic cables, and even military grade wireless microwave towers has not made stock markets more fair and equitable for all traders, but far more fraudulent and profitable for large global trading and banking firms. Thus, for those of us that trade, not only are we trading playing a game of Texas Hold ‘Em poker with the bankers with our two cards perptually face up but we are also playing with a poker dealer that is Skynet that is specifically programmed to rob us of our money. So for my skwealthacademy patrons, when I’ve stated in the past six months that it is twice as difficult to supply successful trading strategies to you as it would have been perhaps just ten years ago, I am not exaggerating.  Furthermore, if I were trading the environment that existed twenty years ago,  I really think that it would be relatively simple to have a 100% success rate in trading. However, today’s environment is a completely different story and for the young “robinhooders” out there, buyer beware, as you are much more liable to lose the shirt off your back than to reap quick money day trading Hertz stock.

And for those of you entering business degrees at the college/university level or advanced MBA degrees, review your curriculum now before you enter your school semester and find the course that covers all the topics I just discussed. Because you won’t find one that does, which is precisely the reason that I say all formal academia in business is not only a complete waste of your money. It is also a complete waste of your time and energy. I have repeated the mantra now for over a decade that if you don’t understand the systemic fraud inherent in the trading systems of big corporate firms as well as their application of technology to execute this fraud, it will be close to impossible, without pure blind dumb luck, which is not repeatable, to make any profit trading this market. In fact, this article, in which I discussed the high double and triple-digit profits of 13 out of 14 trades I discussed publicly on my news site at the start of the year, was based entirely upon understanding the systemic rot and fraud built into the system.

Business schools, every single one of them, except for the handful in the entire world that teach Austrian economics, all reside in the managed perception world of the three parallel universes that exist in this world. If you don’t know what I’m talking about go watch my podcast #103, my review of the final season of the TV series Mr. Robot. After thinking a little bit more about how I originally broke down the residency of these three parallel worlds I’m amending the percentages I stated in podcast #103. I think that more accurate percentages would be as follows: 0.1% to 1% reside in the dark underbelly world that consists of human trafficking, child sex trafficking, slavery, media propaganda and censorship, uber wealthy bankers and politicians, certain royalty around the world and so on; 95% to 98% of the world’s population resides in the empire of illusion artificially manufactured by the parasitic ruling class of this world to control and limit our potential, and only 0.1% to 1% reside in the free world where meaning and purpose is given to life.

You may now download my podcasts here on Podbean and Apple iTunes for absolutely free. Sign up here for more exclusive benefits reserved for patrons only at $5 a month, and subscribe to my free newsletter here. For a slightly more expansive discussion of the above topic, including a more detailed discussion of Hertz and Tesla stock, click the image below:

the untradeable nature of today's stock markets

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